Appeal from the United States District Court for the Eastern District of Illinois, East St. Louis Division. No. 78-Cr.-20 -- James L. Foreman, Judge.
Before Pell and Bauer, Circuit Judges, and Dumbauld, Senior District Judge.*fn*
Appellants Azzarelli Construction Company, and John F. Azzarelli, its vice-president, where convicted of bid-rigging on three highway projects in Illinois in violation of Section 1 of the Sherman Act, 15 U.S.C. 1, and of twelve counts of mail fraud in violation of 18 U.S.C. 1341. The corporation was fined $200,000 on the antitrust count and a total of $12,000 on the mail fraud counts. Azzarelli was fined $25,000 and sentenced to a suspended two-year prison term with three years' probation after serving the first ninety days.
Other defendants indicted are not involved in this appeal. Azzarelli's brother Joseph, president of the company, was acquitted by the jury. Central States Engineering, Inc. was acquitted of mail fraud charges but convicted of the antitrust violation, and has not appealed. Loitz Brothers Construction Company, and its affiliate Kankakee Paving Corporation pleaded guilty to the Sherman Act count and to one count of mail fraud.
The dealings which led to the collusive bids were conducted by Lawrence Loitz for Loitz Brothers and Kankakee Paving, by Larry Boettcher for Central States, and by John Azzarelli for Azzarelli Construction Company. The three men carried on their discussions at a hotel in Springfield the day before the bidding was to take place.
The Sherman Antitrust Act of July 2, 1890, 26 Stat. 209, 15 U.S.C. 1, has been likened to a charter of economic liberty, expressing a national policy akin to constitutional principles in importance and impact upon the general welfare.
As well stated by the late Mr. Justice Hugo Black:
The Sherman Act was designed to be a comprehensive charter of economic liberty aimed at preserving free unfettered competition as the rule of trade. It rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic political and social institutions. But even were that premise open to question, the policy unequivocally laid down by the Act is competition. And to this end it prohibits "Every contract, combination * * * or conspiracy, in restraint of trade or commerce among the several States." Although this prohibition is literally all-encompassing, the courts have construed it as precluding only those contracts or combinations which "unreasonably" restrain competition. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (31 S. Ct. 502, 55 L. Ed. 619;) Chicago Board of Trade v. United States, 246 U.S. 231 (38 S. Ct. 242, 62 L. Ed. 683).
However, there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use. This principle of per se unreasonableness not only makes the type of restraints which are proscribed by the Sherman Act more certain to the benefit of everyone concerned, but it also avoids the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable an inquiry so often wholly fruitless when undertaken. Among the practices which the courts have heretofore deemed to be unlawful in and of themselves are price fixing, United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 210, 60 S. Ct. 811, 838, 84 L. Ed. 1129; division of markets, United States v. Addyston Pipe & Steel Co., 6 Cir., 85 F. 271, 46 L.R.A. 122, affirmed 175 U.S. 211 (, 20 S. Ct. 96, 44 L. Ed. 136;) group boycotts, Fashion Originators' Guild v. Federal Trade Comm., 312 U.S. 457 (, 468, 61 S. Ct. 703, 85 L. Ed. 949;) and tying arrangements, International Salt Co. v. United States, 332 U.S. 392 (, 68 S. Ct. 12, 92 L. Ed. 20).*fn1
The case at bar is a typical or classical example of division of markets or allocation of business by bid-rigging which has been recognized as a Per se violation since the Taft opinion in Addyston Pipe. Able defense counsel ingeniously seeks to modify the traditional contours of Per se violations by inserting an additional element in the definition of such an offense.
The contention is thus formulated in appellants' brief (p. 56): "To invoke the Per se rule . . . the Government is required to prove not only a price-fixing, bid-rigging or job allocation agreement, but it must also prove, as an element of the offense, that the conspiratorial activities involved transactions In the flow of interstate commerce.*fn2 "
In other words, appellants argue that a Per se violation can occur only in a "flow" of commerce situation, and not in an "affecting" commerce situation. This argument, unsupported by authority, is untenable. It confuses the type of Restraint ("Per se " or "unreasonable") with the type of nexus with Commerce ("in" or "affecting").
With respect to the restraints forbidden by § 1 of the Sherman Act*fn3 the cases have recognized that in enacting § 1 Congress "wanted to go to the utmost extent of its Constitutional power" and hence that "however local its immediate object, a "contract, combination . . . or conspiracy' nonetheless may constitute a restraint within ...